Retailers and businesses need to be quick when it comes to planning and executing sales promotions in a fast paced consumer goods market. However, it is important to take the time to consider whether your sales promotions are compliant with Australian Consumer Law, particularly as the ACCC has stated that they will be cracking down on enforcement this year.
Here are our top tips for running a sales promotion in Australia – the legal way.
- Don’t increase your prices before offering a discount
As we discussed in a previous post, Kogan was recently penalised by the ACCC on the grounds that it allegedly increased prices of some of its products prior to offering a 20% discount deal when the actual discount would have been 9%. Increasing prices prior to a discount constitutes false or misleading representations under Consumer law.
- If you are advertising with comparative pricing, make sure you can substantiate it
We previously discussed how businesses can be penalised by the ACCC for “Was/Now” pricing, where products that are placed on sale are advertised at their sale price compared to the RRP. Did you know that products need to be advertised at the RRP for a ‘reasonable’ period of time before you can use statements like “Was $10 RRP/Now $5!”.
Spend some time planning your sales periods to ensure that products are sold at the RRP for a longer period of time than your sale period before you use comparative pricing in your advertising.
- Make sure you have sufficient sale stock
Under the Australian Consumer Law, retailers and businesses engaging in ‘bait advertising’ may be penalised. For example, a retailer advertises a TV in a ‘flash sale’ for discount of 70% off RRP in a large banner on their website. The retailer only has two products in stock.
Bait advertising occurs when a retailer is aware or ought reasonably to be aware that it will not be able to supply those goods at the specified price for a period that is, and in quantities that are reasonable. The court will consider the nature of the market of the business and the nature of the advertisement when considering this question.